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Last week I made an expensive impulse buy: a four-day yoga retreat. And not just any yoga retreat. This is going to be a yoga retreat set on an estate in the English countryside (think: Downton Abbey) with my favorite yoga instructor. I’m going to be sleeping in a four poster bed, doing my best Lady Mary impression while sipping on green juice and doing 3 hours of yoga each day.
While the retreat isn’t until November, I am beyond excited already.
I saw the retreat get announced via Instagram and I knew it would sell out quickly. I clicked through to the purchase page, hesitated for a second with the price, and then proceeded to purchase the four-day trip.
I don’t usually make self indulgent purchases like this so quickly, but I’m tired. I want some time away to do something just for me. And I can’t imagine a better treat for myself than this.
But almost immediately after purchasing, guilt washed over me. There are better, more responsible things that I could be doing with this money. The cost of these four days could go to Henry’s college fund. It could go to home renovations we want to do. It could go toward a trip Jordan and I want to do this winter to visit the Christmas markets in Sweden.
It could go to anything other than this self-indulgent purchase.
Sometimes I struggle spending money on things that are purely, selfishly, just for me. I know I’m not the only person who struggles with this guilt, and I worry about this guilt getting worse now that we have a mortgage, a dog, and a baby. According to one survey of 3,000 mothers, 57% of moms feel guilty when they spend money on themselves. That’s depressing.
I don’t like feeling that tinge of guilt when I shouldn’t. To be clear, this guilt comes from no one but myself. Jordan would never make me feel bad about a purchase – he knows that we both work hard and sometimes we need to treat ourselves. But I would have felt a little guilty about purchasing it. And if I hadn’t purchased it, I would have felt a tiny bit resentful about not going and putting all of our other financial priorities first. What a complicated catch-22 I’ve created for myself.
A few minutes after purchasing I realized that this was a job for my “fun money”. I haven’t used it in months and I have quite a reserve built up in that account. I logged into my account, transferred funds, and immediately the guilt from my purchase was gone.
This was a great reminder of why, regardless of your situation, everyone needs a little fun money.
Fun money: what is it?
Money that you use on anything you want – no guilt, no questions.
How it helps:
Guilt reduction: depriving yourself stinks. It’s exhausting and can be counterproductive to reaching your financial goals. Think of it like a diet: always sticking to a strict program can leave you burnt out. A fun budget is essentially your cheat day. It’s the little splurge you get to make every so often and not feel guilty about.
Self-control: not only can fun money reduce guilt, but it plays an important role in what behavioral economists call mental accounting. By keeping different buckets of money, it is easier to use self-control. So if your fun money account is empty, it’s easier to walk away from purchases.
Independence: if you are in a relationship where you combine money with your partner, fun money can give you a little breathing room that you need. Rather than talking about a purchase with your partner, or in my case, having to think about how the purchase will affect the family, that fun money gives you the opportunity to do something just for you. Also, no matter how in sync you are with your partner about money, you are each individuals who value different things. This helps you spend on the things you value the most, which is how you should be using your money.
Ease: having fun money sitting in a separate account that is designated purely for your enjoyment and splurges is just easier. I like easy.
How is this different from normal spending money?
I do advocate for an automatic budget, which means you take care of all your savings and bill payments at the beginning of the month and spend guilt-free for the rest of the month. But when that happens, you usually spend all of your money that month.
With fun money, what you don’t use rolls over every month. It allows you to save up for splurges that you don’t yet know that you want. So if a yoga retreat that you really want to go on unexpectedly pops up on June 15th and you don’t have enough to pay for it that month, you’re not reaching for your credit card or dipping into savings to make the purchase.
How do you decide on an amount?
There’s no right or wrong amount for fun money – it’s completely based on your goals, your money situation, and what feels right. If you’re aggressively paying off debt or saving for another goal, your fun money might not be much each month. It may just cover a latte out on the weekend. When you’re in a more comfortable position, you might increase that fun money.
Trial and error can help you find what’s right for you.
How we set it up:
Jordan and I have combined almost all of our accounts, but we do each keep one separate checking account specifically for fun money. Every month we have an automatic transfer from our combined checking account to each of our personal checking accounts (see how we automate our money here).
That money is there for us whether we want to spend it or not. We usually spend it on clothes, presents for each other, or big splurges. I’ll be using it for this yoga retreat and Jordan has used it to fly back to the US for a bachelor party.
When we review our goals each year (or more often), we’ll look at how much we’re giving ourselves for this fun money. We’ve changed the amount over the years. When I was paying off my business school loans, the fun money amount was a little smaller. Once those were done, we gave ourselves a little more. But now that we have some other life goals that are important to us, we’ve cut back on that fun money just a bit.
Fun money may seem pointless if you feel like you have your money under control. Or it may seem excessive if you’re struggling with your bills. But the psychological aspects of having money that has no restrictions, no guilt, and no strings can be huge.
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